Banks have suspended the issuance of loans under the rural mortgage program

The issuance of preferential loans at a rate of up to 3% per annum for the purchase of housing in rural areas is temporarily suspended. As the Ministry of Agriculture said on Friday, this was done to “prevent” banks from exceeding the limits of the program after a sharp increase in the key rate by the Central Bank, which led to an increase in budget spending on subsidies to banks on loans already issued. It is stated that the pause in the work of this key mechanism of the government state program to reduce the outflow of the population from rural areas will last until “the current economic situation changes.”

Ministry of Agriculture on Friday announced on the suspension of the issuance of rural mortgages by authorized banks – we are talking about soft loans at a rate of 0.1% to 3% per annum and for up to 25 years, through which you can purchase housing in settlements with a population of up to 30 thousand people. This program started in 2020 and became indefinite in 2022.

Most recently, in July, by decision of the government, it was expanded by increasing the maximum loan amount from 3 million to 6 million rubles. At the same time, new ways of buying or building a home were added, which could be financed by soft loans. If earlier it was allowed to buy a private house on the primary and secondary market or build it under a contract, then in July it became possible to purchase an apartment at the expense of credit funds in a house with a height of up to five floors in key settlements (on the basis of which the accelerated development of infrastructure is carried out, for example, education and health care, for one or more municipalities). The program also included the construction of houses using ready-made house kits (see. “Kommersant” dated July 12).

The decision of the authorities to put the issuance of new loans on hold was explained by the Ministry of Agriculture by an increase in the key rate to 12% (it was raised from 8.5% per annum on August 15).

It is said that the suspension is needed to “prevent banks from exceeding the limits of budgetary obligations.” Let us clarify that, within the framework of the program, the state compensates banks for lost income due to the use of a preferential rate – the amount of the subsidy directly depends on the key rate, respectively, due to its growth, the costs of budgetary “servicing” of existing loans also increase. This year, 19.5 billion rubles are provided in the budget for the implementation of the program. In the first half of 2023, about 7.8 thousand loans were issued under the program for the amount of 20.9 billion rubles, which is more than six times more than the results of the same period last year.

The Ministry of Agriculture assures that the issuance of rural mortgages will resume “after a change in the current economic situation.” However, due to the fact that the Central Bank does not yet give reasons to expect easing of monetary policy in the near future, this does not add certainty to banks and potential borrowers.

Note that the program has previously been suspended. In 2021, a number of banks were forced to temporarily stop issuing rural mortgages due to the exhaustion of their existing limits amid the growing popularity of the program with a rather small amount of funding by today’s standards (see chart). “Kommersant” dated April 6, 2021).

Also, in June-July this year, Sberbank twice suspended accepting new applications for rural mortgages due to high demand, noting that it would resume it after an additional limit was allocated (subsidies are provided monthly).

Rural mortgage is one of the key mechanisms of the state program “Integrated Development of Rural Territories”, which is aimed at reducing the outflow of the population from rural areas, including by increasing the share of comfortable housing. Along with preferential mortgages, such instruments have been launched as social payments for the purchase of housing for villagers working in the agro-industrial complex, in the social sphere and in the forestry industry, as well as social hiring, the use of which is proposed to be expanded (see below). “Kommersant” dated August 22). According to the Ministry of Agriculture, 5.7 billion rubles have been allocated for these areas – in this part, state support is not suspended.

Evgenia Kryuchkova